Cissi Jean Oliver opened Cleaning Angels, Inc. on August 31, 2019. During September, the following transactions were completed:
Issued 5,000 shares of Cleaning Angels common stock for $13,000. Each share has a $1.50 par.
Borrowed $8,000 on a 2-year, 9% note payable.
Paid $9,020 to purchase used floor and window cleaning equipment from a company going out of business ($4,820 was for the floor equipment and $4,200 for the window equipment).
Paid $200 for September Internet and phone service.
Purchased cleaning supplies for $975 on account.
Hired 4 employees. Each will be paid $450 per 5-day work week (Monday-Friday). Employees will begin working on Monday, September 9.
Obtained insurance coverage for $9,840 per year. Coverage runs from September 3, 2019, through August 31, 2020. Cissi Jean paid $2,460 cash for the first quarter of coverage.
Discussions with the insurance agent indicated that providing outside window cleaning services would cost too much to insure. Cissi Jean sold the window cleaning equipment for $4,300 cash.
Billed customers $3,900 for cleaning services performed through September 13, 2019.
Received $800 from a customer for 4 weeks of cleaning services to begin on September 23, 2019.
Paid $325 on amount owed on cleaning supplies.
Paid $2.75 per share to buy 300 shares of Cleaning Angels, Inc common stock from a shareholder who disagreed with management goals. The shares will be held as treasury stock.
Billed customers $4,500 for cleaning services performed through September 20.
Paid cash for employees’ wages for 2 weeks (September 9-13 and 16-20).
Collected $2,500 cash from customers billed on September 16.
Paid $200 for Internet and phone services for October.
Declared and paid a cash dividend of $0.15 per share.
Received notice that a customer who was billed $200 for services performed September 12th has filed for bankruptcy. Cleaning Angels, Inc does not expect to collect any portion of this outstanding receivable. (Cleaning Angels will follow the GAAP Guidelines for uncollectible accounts.)
Billed customers $3,500 for cleaning services performed through September 27.
A. Services performed for customers through September 30, 2019, but unbilled and uncollected were $900.
B. Cleaning Angels used the allowance method to estimate bad debts. Cleaning Angels estimates that 3% of its month-end receivables will not be collected.
C. Record 1 month of depreciation for the floor equipment. Use the straight-line method, an estimated life of 4 years, and $500 salvage value.
D. Record 1 month of insurance expense.
E. An inventory count shows $500 of supplies on hand at September 30th.
F. One week of services were performed for the customer who paid in advance on September 16th.
G. Accrue for wages owed through September 30, 2019.
H. Accrue for interest expense for one month.
I. Cissi Jean estimates a 20% income tax rate. (Hint: Prepare an income statement up to “income before taxes” to help with the income tax calculation.)
Instructions: Journalize the September transactions. Post to ledger accounts. Prepare a Trial Balance as of September 30, 2019. Journalize the adjusting entries. (Round all amounts to whole dollars.) Post adjusting entries to the ledger accounts. Prepare an Adjusted Trial Balance. Journalize the closing entries.